Government negotiating on tax credit refund

Circles EDS

HMRC is in 'delicate negotiations' with EDS on retrieving money the firm owes, according to the Treasury's parliamentary secretary.

The firm, now part of HP, agreed to pay HM Revenue and Customs £71m following severe IT problems over tax credits in 2003, with £26.5m of that discounted from future government business. HMRC had originally claimed £209m.

However, as Conservative MP Richard Bacon told a debate on findings of the Public Accounts Committee in Parliament on 23 October 2008, most of it is still outstanding.

"Apart from the fact [the agreement] gave government departments a rather strong incentive to award EDS further business despite, rather than because of, its track record, it has been clear that over the past two and half to three years since the agreement was reached hardly any money has been paid," he told the Commons.

Angela Eagle, parliamentary secretary to the Treasury, answered that HMRC is "in delicate negotiations on that very subject. The time by which HMRC expects to be paid runs out in the next couple of months and the acting CEO made it clear that he intends to be paid," she said, referring to HMRC's acting head Dave Hartnett.

Eagle added that the government was determined to tackle waste through more joint procurement, pointing out that the public sector spends £175bn this way each year, with £70bn by Whitehall departments.

"As part of transforming the government procurement process, we are also trying to give much more training and recognition to procurement professionals across Whitehall. We want to begin to create a cross-Whitehall and cross-departmental culture of procurement," she said.

Following criticism by Labour MP Austin Mitchell of "too much enthusiasm for big IT projects," such as the NHS National Programme for IT, Eagle said that the Office of Government Commerce is developing a system called the Major Projects Review Group to monitor the progress of large projects.

Mitchell replied that so far, the role of the OGC has been "that of a marriage bureau, lining up departments with IT firms and consultancies, rather than looking at the projects themselves and asking, 'Are they too big? Are they trying to do too much?'"